What Is Proof Of Stake Mechanism In Blockchain?
Proof Of Stake (PoS) Explained
Here the validators are required to stake their coins as security to become a part of the network. Becoming a miner only required one to own the tokens/coins on which the blockchain is based. Similar to proof of work anyone can join the network to become a miner but as the number of joinees grow, the cost to join grows as well.
In proof of stake, everyone can see everyone’s work and this keeps the transactions in check resulting in the blockchain staying valid.
In case a validator is unreliable due to some issue (computer power, network lag etc.) and cannot validate a transaction, a portion of their staked coins is taken away as a punishment. This is called ‘slashing’. Now if a validator commits a fraud like validating a false transaction or transferring some coins to themselves, their entire staked coins are taken away as a penalty.
Therefore ensuring greater security than proof of work. While the former mechanism employed a longer race with harder work, this mechanism has made the race shorter for quicker block solving and increased scalability. Ethereum makes use of the proof of stake mechanism which runs parallel to its proof of work mechanism.
The PoS mechanism can be further categorised into the following:
The main delegation can vote for others to be a delegator resulting in an easy democracy. Binance makes use of this mechanism.
Space and Time PoS:
It makes use of digital storage space and people get paid for storing data on their system. Filecoin and Bittorrent coins make use of this.
Proof of weight:
Technically the entire PoS mechanism can fall under it as it makes use of some weight value for eg. how many coins, duration of holding etc. to determine a validator.
Proof of authority:
It is a modified form of PoS where only a few nodes are trusted and those are not anonymous. It is centralised but also faster.